The real story this week was the continued rise in long-term interest rates, as nervous bond traders, whose vigilance about inflation is truly never-ending, kept pushing rates higher in anticipation of a bad Producer Price Index number on Friday and a bad Consumer Price Index number next week. Interest rates are now above 6 percent for the first time in more than a year, and stock prices have suffered--although, truth be told, not as much as you might have expected--as higher bond rates have made stock prices look, well, rather pricey.
The interesting thing about all this is that the stock market appears to have already priced in a rate hike by the Federal Reserve, but the bond market still appears unconvinced, or perhaps it's simply unconvinced that one quarter-point hike will be enough to cool an economy that's still growing very fast. In Greenspan we all trust, of course, but ironically--given his once-formidable reputation as an inflation hawk--the bond markets seem to trust him less than the rest of us. And so, we Chatter on.
1. "Former Surgeon General C. Everett Koop's Internet medical-advice site went public this week, and saw its shares soar. The company's called drkoop.com. And so the apocalypse draws ever nearer."
2. "The founder, chairman, and CEO of party-supply store Party City is resigning, perhaps in part because the company's stock has fallen from $33 a share last June to, well, it's hard to know what the price is because you can't actually buy shares in the company right now. It's hard to believe, really. A whole chain of stores devoted to nothing but party supplies: How could it go wrong? I mean, do you think you can just find paper plates, wrapping paper, and decorations anywhere?"
3. "The Wall Street Journal described a corporate training session designed to inculcate the value of teamwork which, among other things, put participants into BMW Z3 convertibles together and sent them 'zooming down a straightaway at speeds topping 50 m.p.h.' Whoa! Fifty miles an hour on a straightaway! Hey, slow down, you crazy kids! The human body can't sustain the G-forces at that speed!"
4. "Lockheed announced that its earnings for this year would be half of what analysts were expecting and said that executives had discovered that the problems in its military aerospace businesses were much more serious than they had expected. This is the third time in a year that Lockheed has made this kind of announcement. The company's CEO said he would 'be blamed severely' if he failed to fix the problems now. Apparently no one will be blamed for creating the problems."
5. "A Portland judge took it upon himself to rule that AT&T had to grant access to its cable lines to its competitors in the field of high-speed Internet access. He probably would have done better to rule that AT&T had to stop running its goofy print ad campaign about its acquisition of MediaOne."
6. "Procter & Gamble announced that it was going to close 10 factories and cut 15,000 jobs over the next six years in order to revamp product development and spur sales growth. The community of crazies was not placated, though, since P&G announced no plans to get rid of its satanic moon-and-stars logo."
7. "The Phantom Menace has now taken in $457 million at the box office, or about $30 million a day since it opened. It's still averaging better than $10,000 a theatre. This has given Fox the title of top studio of the year, with 17 percent of the total 1999 domestic box-office gross. Of course, Fox is only getting something like 10 percent of the money that Phantom Menace is making. But hey, it's Hollywood. It's not like we're talking about business or anything."